Ports: Commission asks Lithuania to abolish the priority right for leasing public port land

The European Commission has sent today a reasoned opinion to Lithuania for maintaining a priority right for cargo-handling operators renewing their port land lease contract upon its expiry. Cargo-handling operators from other Member States wishing to establish themselves in Lithuania might be discouraged from doing so because of the barrier this provision raises on the market for cargo-handling services. This is the second stage in the infringement procedure. If Lithuania fails to react satisfactorily, the Commission may refer the matter to the EU Court of Justice.

The EU rules

The European Union requires the elimination of restrictions on freedom of establishment. The Treaty precludes any national measure which, even though not discriminatory on grounds of nationality, is liable to hinder or render less attractive the exercise of the freedom of establishment that is guaranteed by the Treaty.

The access to port land is a precondition for providing cargo-handling services1. As a consequence, in principle, it also is a precondition for choosing the place of establishment in an EU port by cargo-handling operators. Therefore, a competitive, transparent, non-discriminatory and reviewable procedure for land leasing is the best way of securing a fair and efficient allocation of this scarce resource, while ensuring compliance with the principle of freedom of establishment.

The reason for sending a reasoned opinion

In Lithuania, a 1996 law, as amended, governs the land lease in maritime ports. It requires that the land at the port is leased solely on the basis of competitive tendering, except when the incumbent lessee exercises his priority right to renew the lease contract. A lessee acquires such priority right when he fulfilled all his obligations concerning cargo-handling laid down in the port land lease contract.

Despite the fact that Lithuania has not contested that the priority right to renew the port land lease contract is incompatible with the freedom of establishment, the provisions amending this regime have not yet been adopted and Lithuania still does not comply with the EU law.

The practical consequences of a restriction on the freedom of establishment

The priority right laid down by the Lithuanian law favours the incumbent lessee providing cargo-handling services in a Lithuanian port. Cargo-handling operators from other Member States wishing to establish themselves in Lithuania might be discouraged from doing so because of the barrier this provision raises on the market for cargo-handling services.

Next steps

The Commission's request takes the form of a reasoned opinion under EU infringement procedures. If Lithuania fails to inform the Commission within two months of measures taken to ensure full compliance with EU law, the Commission could refer the case to the EU Court of Justice.